Economics and Westeros

Over at Offsetting Behaviour, I’ve wondered why the Kings of Westeros invested so little in food preservation technology. The society and technology, generally, seem perhaps 14th century relative to our world. But wouldn’t a world with long and variable-length winters invest a pile more in food preservation techniques: canning is not that high-tech, and I would have expected more glass-making in Westeros for making glasshouses. But no.

Now the current season is coming to an end with Sunday night’s finale, and while you wait to see if Stannis suffers deep pangs of regret for burning his daughter at the stake, or if Cersei will survive the judgment of the zealots she armed, why not kick back and enjoy four smart economic thinkers’ takes on the economic implications of Westeros?

1. People aren’t good at stocking up for the future.

From Ryan Decker, an economist who blogs at Updated Priors:

To me, the most striking economic fact about Westeros is the lack of focus on saving. Given the length of winters and the fact that winter means little or no food production, why isn’t every house focused like a laser on storing food and developing better food storage technology? If I were (the late) Tywin Lannister, the only weapons I’d buy would be the ones used to guard my storehouses. I’d be sending gold by the cartload to Highgarden in exchange for food. I’d be looking at the advanced civilizations in the east for storage technology ideas (as Eric Crampton has noted at offsettingbehaviour.blogspot.com, Westeros could really benefit from more glass).

The Westerosi story has implications for individuals. The Keynesian prescription for recessions is more spending (by everyone). But that does not mean that such spending is a good idea at the level of individuals; and it certainly does not mean that entering the next recession without a lot of savings is a good idea. It doesn’t matter what causes the next recession — whether it’s a Real Business Cycle recession (like the Westerosi winter) or Keynesian, it’s better to enter it with higher savings. If you end up with more savings than you need, you may be able to trade your wealth for assets that other houses need to offload at fire sale prices (for example, if a place like Highgarden saves well they could end up coming out of the winter owning Lannister gold mines and Iron Islander ships).

More from me on the Economics of Westeros here and here. Winter is coming.